1.
Award: 0 out of 2.00 points
Inflation is assumed to be a temporary problem that does not affect financial decisions.
True
False
2.
Award: 0 out of 2.00 points
The most common partnership arrangement carries limited liability to the partners.
True
False
3.
Award: 0 out of 2.00 points
One advantage of the corporate form of organization is that income received by stockholders
is not taxable since the corporation already paid taxes on the income distributed.
True
False
4.
Award: 0 out of 2.00 points
Agency theory assumes that corporate managers act to increase the wealth of corporate
shareholders.
True
False
5.
Award: 0 out of 2.00 points
The primary market includes the sale of securities by way of initial public offerings.
True
False
6.
Award: 0 out of 2.00 points
High-quality initial public offerings are usually sold in a primary market, such as the New York
Stock Exchange. However, low-quality stocks must usually be sold in secondary markets,
such as NASDAQ.
True
False
7.
Award: 0 out of 2.00 points
Social responsibility is an expense and thus should be avoided by financial managers
because it will lead to loss of income.
True
False
8.
Award: 0 out of 2.00 points
Risk management will be an important factor over the next decade.
True
False
9.
Award: 0 out of 2.00 points
Agency theory would imply that conflicts are more likely to occur between management and
shareholders when
the company is owned and operated by the same person.
management acts in the best interests of maximizing shareholder wealth.
the chairman of the board is also the chief executive officer (CEO).
the board of directors exerts strong and involved oversight of management.
10.
Award: 0 out of 2.00 points
Insider trading occurs when
someone has information not available to the public which they use to profit from trading in
stocks.
corporate officers buy stock in their company.
lawyers, investment bankers, and others buy common stock in companies represented by their firms.
any stock transactions occur in violation of the Federal Trade Commissions restrictions on
monopolies.
11.
Award: 0 out of 2.00 points
Balance sheet items are required to be adjusted for inflation.
True
False
12.
Award: 0 out of 2.00 points
The guidelines of the International Accounting Standards Board have been successfully
reconciled with the rules of the FASB in the United States as of 2010.
True
False
13.
Award: 0 out of 2.00 points
A $125,000 credit sale could be a part of a firm’s cash flow from operations if paid off within
the firm’s fiscal year.
True
False
14.
Award: 0 out of 2.00 points
Book value per share is the most important measure of value for a stockholder.
True
False
15.
Award: 0 out of 2.00 points
Which of the following would not be classified as a current asset?
Marketable securities
Investments
Prepaid expenses
Inventory
16.
Award: 0 out of 2.00 points
Asset accounts on the balance sheet are listed in order of
liquidity.
profitability.
size.
importance.
17.
Award: 0 out of 2.00 points
Which account represents the cumulative earnings of the firm since its formation, minus
dividends paid?
Paid-in capital
Common stock
Retained earnings
Accumulated depreciation
18.
Award: 0 out of 2.00 points
Which of the following would represent a source of funds and, indirectly, an increase in cash
balances?
A reduction in accounts receivable
The repurchase of shares of the firm’s stock
A decrease in net income
A reduction in notes payable
19.
Award: 0 out of 2.00 points
A firm’s purchase of plant and equipment would be considered a
use of cash for financing activities.
use of cash for operating activities.
source of cash for investment activities.
use of cash for investment activities.
20.
Award: 0 out of 2.00 points
Hoover Inc. has current assets of $350,000 and fixed assets of $650,000. Current liabilities
are $100,000 and long-term liabilities are $250,000. There is $120,000 in preferred stock
outstanding and the firm has issued 10,000 shares of common stock. Compute book value
(net worth) per share
$84.00.
$53.00.
$75.00.
None of the options.
21.
Award: 0 out of 2.00 points
Return on equity will be higher than return on assets if there is debt in the capital structure.
True
False
22.
